With Focus on Youth, 2 Small TV Networks Unite

By BILL CARTER

Published: January 25, 2006

CORRECTION APPENDED

Two small television networks became a large one yesterday when CBS and the Warner Brothers Entertainment unit of Time Warner joined forces to form a new, youth-oriented network out of the programs on UPN and WB.

The new venture, called CW, will take the most popular shows from UPN and WB, each of which has struggled to turn a profit.

The move underscored the expanding power in the television industry of the CBS chief executive, Leslie Moonves, just a few weeks into his tenure atop a stand-alone media company. He will now oversee not only CBS, the most-watched of the broadcast networks, but also an enhanced part-time network aimed at viewers under 35 years old -- the audience that CBS reaches least well.

CBS only recently split from the cable half of the Viacom media group and has already found a new partner with a strong connection to younger audiences.

The move comes at a time when networks are experimenting with ways to reach viewers, from DVD's to downloads to computers and iPods -- technologies disproportionately used by younger consumers.

Mr. Moonves has increasingly emphasized CBS's role as content provider, saying the network intends to be a supplier of programming, whether it be delivered to homes free via the television or through paid downloads. But the only content that consumers are likely to pay to download are hit programs, and several executives on both sides of the venture said the combination of the two networks would greatly increase the opportunity to create such hits.

CBS and Warner Brothers will be 50-50 owners of the venture, which will broadcast 30 hours a week, including prime time, some daytime shows, and the Kids' WB children's block. Among the programs highlighted in the announcement yesterday were ''America's Top Model,'' ''Veronica Mars'' and ''Everybody Hates Chris'' from UPN and ''Gilmore Girls,'' ''Smallville'' and ''Beauty and the Geek'' from WB.

Mr. Moonves promised that the CW program lineup would remain committed to what he called ''minority audiences.'' UPN has stood out as a provider of shows with largely African-American casts.

Barry Meyer, the chairman of Warner Brothers Entertainment, said the new network could be profitable in its first year. That would be a significant turnaround for both existing networks, which executives said had been losing $25 million to $75 million a year.

Mr. Meyer said WB had ''edged into profitability'' during a couple of its 11 years. Mr. Moonves qualified UPN's financial status several times. He said, ''UPN was approaching the point, where it was getting to the point, where we were hoping to break even, and getting close.''

CW would benefit all the constituencies a network deals with, Mr. Moonves said, from local stations to advertisers -- a list that he made a point of saying included the ''shareholders in the CBS Corporation.'' Shares in CBS rose $1.04, to $26.89

Advertisers generally expressed enthusiasm for the new network. Shari Ann Brill, vice president and programming director at Carat USA in New York, part of the Carat media agency owned by the Aegis Group said: ''I really see it as a good thing. It's a very viable fifth network.''

Sam Armando, vice president and director for national television research at the Starcom USA media agency in Chicago, part of the Starcom MediaVest Group unit of the Publicis Groupe, said the merger ''removes a lot of supply out of the marketplace,'' referring to commercial time on the two networks combined compared with their current separate operations.

Mr. Moonves said he did not foresee the new network growing into something so competitive that it would threaten the success of CBS, noting that CW will probably remain a niche network devoted to serving only young adult viewers.

Analysts said the strategy of joining two weaker networks that both aim at a younger market made sense, even in an era when media mostly seem to be fragmenting.

Michael A. Kupinski, a media analyst with A. G. Edwards & Sons, said, ''I look at it as a net benefit.'' The deal not only reduced the losses at the two companies, he said, but could also help all the networks by tightening the amount of advertising time available for marketers to buy.

Both WB and UPN will continue to operate independently until September, when they will be shut.

The new network, whose name, CW, is a combination of CBS and Warner, will begin operations on a new lineup of stations made up of the UPN group owned by CBS and outlets owned by WB's station partner, Tribune Broadcasting.

Tribune, which is part-owner of WB, will become the principal affiliate group. Those stations will reach about 48 percent of the country, and the new network has agreements with other affiliates to extend distribution to 95 percent of the country.

For many of the biggest cities, the move will leave a station without network programming. In New York, the new network will be broadcast on Channel 11, which has been the WB station; Channel 9, which has been the UPN station, will have to seek other programming.

The station group excluded from the deal belongs to the News Corporation. Beyond New York, the News Corporation owns stations affiliated with UPN in cities, including Los Angeles, Chicago, and Washington. Andrew Butcher, a spokesman for the News Corporation, said the group had not had a chance yet to make any plans for replacing UPN's programming. But, he said, ''we see all changes as opportunities.''

In probably the most significant executive announcement tied to the new network, Mr. Moonves's lieutenant at UPN, Dawn Ostroff, was named the president of entertainment for the new network. The two top executives at WB, Garth Ancier and David Janollari, were not given positions at the new network. Mr. Meyer thanked them for their efforts at WB.

Mr. Meyer and Mr. Moonves said the talks began at a dinner party they attended around the Thanksgiving weekend. The talks moved quickly, driven by a coincidence of timing. The affiliation agreements of both networks were up in September. ''If this didn't happen now, we would have both had to do new affiliation deals and we would have been locked in concrete for years,'' Mr. Meyer said.

The talks were a tightly held secret; even Ms. Ostroff learned of the plan only within recent days.

Mr. Moonves said close personal relationships among the important negotiators played a crucial role in keeping the deal on track. He and Mr. Meyer have been friends for 20 years; Bruce Rosenblum of Warner Brothers and Nancy Tellem of CBS are former colleagues from Warner's business affairs office and close friends.

A senior CBS executive suggested that CBS and Time Warner might get together again on a joint venture, saying that CNN and CBS News might make good partners.

Photos: The WB series ''Smallville,'' top, and the UPN show ''Everybody Hates Chris'' will be offered by a new merged network, CW. (Photo by Jamie Trueblood/UPN); (Photo by Michael Courtney/WB)(pg. C4)

Chart: ''Making, Not Making, the Cut''
In 27 major markets where the UPN and WB networks have coverage, affiliates of one or the other network will become part of a new network, CW. The stations that do not become part of the new network will have to find new programming. Here are highlights.

Correction: January 31, 2006, Tuesday
A chart in Business Day on Wednesday with an article about the merger of the WB and UPN networks to form the CW network misidentified the owner of some television stations. The stations -- WUPA in Atlanta, KXTA in Dallas, WBFS in Miami, KBHK in San Francisco and KSTW in Seattle -- are owned by the CBS Corporation, which split off from Viacom recently, not by Viacom.